chapter 17

International Business, 6th Edition

International
Operations Management

Griffin & Pustay

17-1
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
 Chapter Objectives

• Describe the nature of international

operations management
• Analyze the supply chain management
and vertical integration decisions facing
international production managers
• Analyze the meaning of productivity and
discuss how international firms work to
improve it

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 Chapter Objectives (continued)

• Explain how firms control quality and

discuss total quality management in
international business
• Analyze how international firms control
the information their managers need to
make effective decisions

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 Operations Management

Operations Management is the set of

activities an organization uses to transform
different kinds of inputs (materials, labor,
and so on) into final goods and services.

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 Operations Management
(continued)

International Operations Management:

refers to the transformation-related
activities of an international firm.

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 Figure 17.1 The International
Operations Management Process

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 Complexities of
International Operations Management

Resources

Location Logistics

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 Forms of Operations Management

Service
Production Operations
Management Management

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 Supply Chain Management

Supply Chain Management

is the set of processes and steps a firm

uses to acquire the various

resources it needs to create its products .

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 Supply Chain Management

Vertical Integration is the extent to

which a firm either provides its own
resources or obtains them from other
sources.

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 Figure 17.2 Basic Make-or-Buy Options

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 Influence Factors for the
Make-or-Buy Decision

Size Scope of Operations

Technological
Nature of Product
Expertise

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 Figure 17.3 Competitive Advantage versus
Strategic Vulnerability

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 Necessary Trade-Offs in the
Make-or-Buy Decision

Flexibility Cost

Trade-offs

Investment Control

Risk

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 Factors Affecting Location Decisions

Country-related issues

Product-related issues

Government policies

Organizational issues

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 Country-Related Issues

Resource availability

Cost

Infrastructure

Country-of-origin effects

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 Country-Related Issues

Such issues play

key roles in location
decisions for
manufacturers.

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 Product-Related Issues

Required
Value-to-Weight Production
Ratio Technology

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 Government Policies

• Stability of political process

• National trade policies
• Economic development incentives
• Existence of foreign trade zones
(FTZ)

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 Organizational Issues

Business Strategy

Organizational
Structure

Inventory Management
Policies

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 International Logistics

International logistics is the management

of the flow of materials, parts, supplies, and other
resources from suppliers to the firm; the flow of
materials, parts, supplies, and other resources
within and between units of the firm itself; and the
flow of finished products, services, and goods from
the firm to customers.

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 Factors Distinguishing International and
Domestic Logistics

Transport
distance

Number of
transport modes

Complexity of
regulatory content

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 Characteristics of International Services

• Services are intangible

• Services are not storable
• Services may require customer
participation
• Services may be tied to the purchase of
other products

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 Managing Service Operations

Capacity planning

Location planning

Facilities design and layout

Operations scheduling

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 Productivity

Productivity is an
economic measure of
efficiency that summarizes the value of
outputs relative to the value of the inputs
used to create the outputs.

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 Strategies for Enhancing Productivity

• Spend more on R&D

• Improve operations
• Increase employee involvement

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 Managing Quality in International
Business

Quality: the totality of features and

characteristics of a product or service that
bear on its ability to satisfy stated or implied
needs

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 International Organization for
Standardization

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 Figure 17.4 Essential Components of
Total Quality Management

Strategic Commitment
to Quality

Employee High-Quality Up-to-Date Effective

Involvement Materials Technology Methods

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 Key Components of
Total Quality Management

Statistical
Process Benchmarking
Control

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 Managing Information in International
Business

Information is data in a form that is of

value to a manager in making decisions
and performing related tasks

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 Managing Information in International
Business (continued)

Information System is a methodology

created by a firm to gather, assemble,
and provide data in forms useful to
managers.

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 All rights reserved. No part of this publication may be
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photocopying, recording, or otherwise, without the prior
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States of America.

Copyright © 2010 Pearson Education, Inc.

publishing as Prentice Hall